A company sells a product which has a unit sales price of $5, unit variable cost of $3 and total fixed costs of $120,000. The number of units the company must sell to break even is
A) 60,000 units.
B) 24,000 units.
C) 240,000 units.
D) 40,000 units.

Question

Quizplus · Accepted Answer

The break-even point in units is calculated by dividing the total fixed costs by the contribution margin per unit (sales price per unit minus variable cost per unit). Here, it is $120,000 / ($5 - $3) = 60,000 units.

A Company Sells a Product Which Has a Unit Sales